Do Alaskans want Chicago style pay for play?

By Dave Harbour
Alaska Standard Contributer

Outer Continental Shelf drilling off the coast of Alaska may be to 21st Century Alaska what the Trans Alaska Pipeline was to the last few decades. Without OCS, our economy’s fate will rest only on the tenuous development of a gas pipeline or ANWR. Of the three, OCS is most immediately promising. To make OCS reality, we must first face two big hurtles!

First, we need to heed the Alliance’s promptings and have every employee, every family member and every neighbor write to the Interior Department before its September 21 deadline for OCS lease sale comments.

Second, we need to assure that the Feds will share OCS rents, royalties and bonus bids with the state whose infrastructure and services will support offshore activity.

This is going to require some soul searching: will Alaskans agree that Federal revenue sharing should go to the State treasury for the Governor and Legislature to properly allocate to OCS impacted areas, services and infrastructure? Or, will special interests block OCS development unless elected officials agree to funnel hundreds of millions of dollars directly into their bank accounts? Are the rest of us willing to pay an OCS ransom from the state share in order to assure “protection from OCS obstruction”?

Earlier this summer Senator Mark Begich circulated for comment a draft bill which would have established an Arctic Regional Citizens Advisory Council (RCAC). The RCAC damage to OCS development is too huge to summarize in this space. Needless to say, environmental and North Slope Borough constituencies could have benefited by having the industry pay millions every year. That OCS toll payment would finance meetings, offices, and expense-paid travel of Council Members while they second-guessed industry’s every Chukchi or Beaufort Sea activity.

Continuing this OCS odyssey, on July 24 Senators Lisa Murkowski and Mary Landrieu introduced a revenue sharing bill (S. 1517). It supposedly required the Federal government to allocate 37.5 % of OCS rents, royalties and bonuses to adjacent states.

Lest governors and legislators get their hopes too high, the bill had two snags:

1) 20% of that 37.5% would be sent by the Feds directly to local costal governments in the adjacent states (assuming, one supposes, that the Congress believes Legislatures incapable of properly allocating the states’ 37.5% share); and,

2) an ADDITIONAL 33% of Alaska’s 37.5% would be sent by the Feds to the Alaska Regional Native Corporations with coastal villages in the adjacent OCS area (assuming, one supposes, that the Congress believes it is justified to divert public resources to private, Native Regional Corporations.)

Then, in his first Floor Speech to the United States Senate on August 3, Senator Mark Begich spoke of several Arctic bills he was introducing and one he was not. One of the introduced bills would supposedly provide a share of OCS revenues “to Alaska” (S. 1560). Unlike the Murkowski-Landrieu bill, it excluded revenue sharing for other states and only targeted Alaska. Like its sister bill, the Begich bill took allocation of the state’s 37.5% share out of the hands of Alaska’s elected leaders and by Federal law requires distribution of a similar 53% of the state’s share directly to Northern political subdivisions and Regional Native Corporations.

Later in his floor speech, Begich said, “At the request of North Slope Borough Mayor Edward Itta and our constituents there, I agreed to hold off on (the RCAC bill) for now so we can continue the conversation with the people of the region, along with industry and regulatory stakeholders.”

Let’s assume Secretary Salazar responds to the Nation’s need for more domestic energy production by proceeding aggressively with Alaska OCS leasing. Let’s also assume the majority of Congress is willing to provide Alaska with a 37.5% share of revenue from our OCS activity. The question is: as TAPS throughput declines along with associated state revenues, do we insist that 100% of the State’s share will flow to the State? Or, do we permit special interests to carve out 53% of Alaska’s 37.5% as payment for services rendered, in this case the service of not disrupting an already demanding and expensive Alaska OCS exploration and development permitting process?

It looks like a classic case of practicality vs. principle, and the future of Alaska’s support industry truly hangs in the balance.

Dave Harbour is a retired member of the Regulatory Commission of Alaska. He is a former Chairman of the Alaska Council on Economic Education and the Anchorage Chamber of Commerce.